What is a SoundExchange Featured Artist Letter of Direction?
A SoundExchange Featured Artist Letter of Direction (LOD) is a document (found on the How To Guides & Useful Links page here
The term “Featured Artist” generally refers to the individual(s) or group(s) most prominently featured on a track or album. Non-featured Artists, such as session musicians or backup singers, do not receive royalties directly from SoundExchange.
Who can receive Featured Artist royalties pursuant to an LOD?
If there is any question whether an individual is eligible to receive Featured Artist royalties via an LOD, SoundExchange will reach out to the party who submitted the LOD to clarify the role of the Creative Participant listed on the LOD.
LODs are not used for one Featured Artist to pay another Featured Artist for a sound recording on which they collaborated (e.g., if a sound recording is released as “Artist A featuring Artist B,” Artist A would not execute an LOD to pay Artist B). Rather, SoundExchange would treat such a sound recording as a collaboration and allocate the Featured Artist royalties 50/50 between Artist A and Artist B (unless Artist A and Artist B inform SoundExchange of an alternative allocation).
Can I use an LOD to direct payments to other third parties besides Creative Participants?
An LOD can only be used by Featured Artists to direct payments to Creative Participants. LODs cannot be used to direct payments to other third parties, including record labels, lenders, royalty advance companies, or any person or entity not directly involved in the creative process.
If there are multiple Featured Artists on a sound recording, who needs to complete an LOD?
It depends, but please be aware that SoundExchange does not
For example: Sound Recording X is performed by “Artist A featuring Artist B.” SoundExchange would treat Sound Recording X as a collaboration and allocate the Featured Artist royalties 50/50 between Artist A and Artist B (unless Artist A and Artist B inform SoundExchange of an alternative allocation). If the Creative Participant is seeking to receive payment on all royalties allocated to Artist A and Artist B for Sound Recording X, the Creative Participant would need to obtain LODs from both Artist A and Artist B
However, the specified percentage on the LOD payable to the Creative Participant would only apply to Artist A’s allocation of the royalties and not to Artist B’s allocation of the royalties.
What paperwork needs to be completed to implement an LOD?
SoundExchange requires the following completed documents:
1) A COMPLETED AND SIGNED SOUNDEXCHANGE LETTER OF DIRECTION FORM (AVAILABLE HERE ), WHICH INCLUDES:
Name of the Solo Artist or Group on the recording(s) (“Featured Artist”) Performer(s) legal name(s) Effective Date for the LOD (use Repertoire Chart if multiple effective dates) Performer(s) Signature(s) and Signature Date(s), or Authorized Signatory* Performer(s) Printed Name Name of the Producer, Mixer, or Engineer (“Payee”) (i.e., the Creative Participant’s Name or Company name. Please note that SoundExchange will only pay a company that is solely owned by the Creative Participant) Payee Address, Telephone Number and E-Mail *The Authorized Signatory is the authorized contact for the Featured Artist performer(s) on file with SoundExchange. Please see item 3 below if this signature is presented electronically.
2) A COMPLETED LETTER OF DIRECTION REPERTOIRE CHART (AVAILABLE HERE ) OF RECORDINGS COVERED, WHICH INCLUDES:
Solo Artist or Group Name, Sound Recording Track Name, Effective Date and ISRC (if available) for each sound recording to be covered. You can look up ISRCs here. Payment Percentage (“Percentage”) for each sound recording, expressed as a percentage of the Featured Artists share. Do not enter as points or fractions of percentages. 3) THE DOCUSIGN CERTIFICATE OF COMPLETION (OR EQUIVALENT DOCUMENT) IF THE SIGNATURE ON BEHALF OF THE PERFORMER OR AUTHORIZED LOD SIGNATORY IS PRESENTED ELECTRONICALLY.
If any of these documents are missing or incomplete, SoundExchange will contact the person who submitted the LOD or the Featured Artist’s authorized contact to complete the information. This will delay activation of the LOD.
For additional how-to guides and useful links for managing your SoundExchange account, visit HERE .
What Constitutes A Compliant Signature?
LODs must be signed by the performer or their Authorized Signatory with the following types of signatures:
A handwritten (“wet”) signature that matches the signature on file with SoundExchange, OR An electronic signature (e.g. typed, or drawn with a stylus or finger) In situations where the signature of the performer or their Authorized Signatory is presented electronically, the DocuSign Certificate of Completion (or equivalent document if another electronic signature service is used) must be included with the LOD submission. Failure to include this certificate will delay activation of the LOD.
How do I submit an LOD to SoundExchange?
The LOD form and Repertoire Chart can be downloaded from the SoundExchange website or through your SoundExchange Direct account at https://sxdirect.soundexchange.com
Completed and fully executed LODs and the Repertoire Chart should be submitted to SoundExchange via email at [email protected] https://sxdirect.soundexchange.com
Can I file one LOD to cover multiple sound recordings?
Yes. An LOD directs SoundExchange to pay a portion of a specific Featured Artist’s royalties for one or more sound recordings to a specific Creative Participant. An LOD can include multiple sound recordings (or multiple albums) by the same Featured Artist, but cannot include multiple sound recordings by multiple Featured Artists. Please note that the LOD will apply to a given sound recording regardless of the album it appears on. In other words, if a specific sound recording appears on multiple releases, the LOD will be applied to all instances of the specific sound recording on all releases.
How will I know that my LOD is set up?
You will receive a notification of confirmation when SoundExchange receives your LOD application. The authorized contacts of the Featured Artist, the Creative Participant, and the person who submitted the LOD will receive further notification when the LOD is processed and becomes active.
Note : An LOD takes a minimum of two weeks to process
When will Creative Participants be paid?
Creative Participants will begin receiving payments from SoundExchange the next pay period in which their account reaches a distributable amount (either the following month or the following quarter depending upon the structure of their account) after the valid LOD becomes active with a couple caveats listed below.
The Creative Participant’s royalty balance must meet SoundExchange’s payment threshold to be paid. Accounts receiving electronic payments will be paid monthly for balances greater than $100 and quarterly for balances greater than $10. Accounts receiving checks will be paid for quarterly for balances greater than $100. Creative Participants will not receive payment for a particular recording if that recording’s Featured Artist royalties become temporarily or permanently ineligible for payment. Examples of this include but are not limited to the recording’s royalties entering a Featured Artist dispute, or the Featured Artist’s withdrawal of registration from SoundExchange.
How will the payments I receive from SoundExchange pursuant to an LOD be reported to the Internal Revenue Service (IRS) and other tax authorities?
As of January 1, 2020, both Featured Artists and Creative Participants will be subject to backup withholding unless they have provided SoundExchange with a Taxpayer Identification Number (TIN). SoundExchange will handle the withholding and reporting of payments made to Creative Participants directly with the IRS, and the artist will no longer need to 1099/1042 the Creative Participants themselves.
Prior to January 1, 2020, Featured Artists were required to report payments made to Creative Participants to the IRS and to provide a Form 1099 or 1042 to Creative Participants each year as needed.
SoundExchange does not provide any tax advice, and no information contained herein should be construed as tax advice.